The Inter-Ministerial Group (IMG) examining the financial stress in the telecom sector is expected to submit its report in 20 days, union minister Manoj Sinha said today. Acknowledging that the telecom sector is going through financial stress, he said action would be taken on the basis of the report. During the Question Hour in the Lok Sabha, the communications minister said the IMG’s report is expected in 20 days. He said the group was constituted to examine the systemic issues affecting viability and repayment capacity in telecom sector and furnish recommendations for resolutions of stressed assets at the earliest.
The group would also look into the policy reforms and strategic interventions for the telecom sector. Amid intense competition, margins in the telecom sector have been squeezed and there are also fears of defaults on loans taken from banks. The group, in June, had held extensive dialogue with all telecom players as well as large banks to discuss the industry’s financial difficulties and suggest measures to ease the situation.
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In May, the Reserve Bank of India (RBI) had asked banks to review immediately their exposure to the telecom sector, which has a debt of Rs 4.6 lakh crore, and make higher provisions to firewall their business against any future stress. To a query on whether the Telecom Regulatory Authority of India (TRAI) has urged the government to favourably consider its recommendation related to reduction in levies and relaxation of payment period for auctioned spectrum to telecom players, Sinha replied in the affirmative.
As per the TRAI, these recommendations would help in minimising the financial stress of the telecom companies and enable them to offer quality services to consumers at affordable prices, he noted. To another query, Sinha said the TRAI, last month, has proposed that the Department of Telecommunications may take up with the finance ministry “the issue of reduction in GST rate from 18 per cent to flat 5 per cent by declaring telecom sector as core infrastructure industry and economy enabler in India”. The Goods and Services Tax (GST) came into effect on July 1.